The Gloucestershire town saw prices rise by 13% to an average of £313,150, the lender found.
Perth in Scotland experienced the biggest fall in prices, dropping 5.3% to an average of £180,687.
Most of the biggest gains were in London and southern England, while Scotland, Yorkshire and the Humber dominated the list of biggest fallers.
The average increase in house prices across the UK was 2.7%, according to the Halifax which bases the figures on its own mortgage data.
Bournemouth recorded the second-biggest rise, with prices climbing by 11.7%, while Brighton came in at number three with an 11.4% increase.
"A number of towns and cities have recorded significant rises in house prices over the past year, with all of the top 20 performers recording growth of at least double the national average," said Halifax managing director Russell Galley.
"Unlike last year, the top performers are not exclusive to London and the South East, with the top spot now belonging to Cheltenham in the South West, and towns in East Anglia, East Midlands, North West, Wales and Yorkshire and the Humber also making the list."
However, 15 of the top 20 house price increases were in London and southern England.
The exceptions were Huddersfield, where prices rose by 9.3%, Nottingham (8.9%), Lincoln (8.4%), Stockport (8.2%) and Swansea (7.7%).
Perth headed the list of 13 towns and cities which saw house prices fall last year.
It was followed by Stoke-on-Trent, where prices fell by 4% to £152,340, and Paisley, which saw a decline of 3.6% to £123,665.